A Book Is a Book — Or Is It?

If we look back to the beginning of the agency model in ebooks, which began a little more than one year ago, we can find the publishers’ claimed rationale for changing models (which occurred with a mighty push from Apple): to protect ebooks from becoming mere commodities and to prevent consumers from establishing a mindset that $9.99 is the right price point. Okay, that was the rationale, coupled with a fear of Amazon becoming too powerful, that was bandied about. The question is: Were publishers successful in preventing the commoditization of books?

The reports from the Agency 6 indicate that ebooks are rapidly becoming a significant source of revenue for publishers, perhaps even their primary growth area. Latest reports show growth in ebook sales (Barnes & Noble reports 140% rise in digital sales; Hachette reports ebooks as 20% of U.S. sales and 5% of worldwide sales; Penguin and Simon & Schuster report digital as 14% and 15% of revenue, respectively; Bertelsmann/Random House reports digital sales in the first six months of 2011 as exceeding all digital sales in 2010);  and a significant decline in mass market paperbacks (down 14%). Profits are up slightly, even though volume appears to be down somewhat. All of which seems to favor the notion that the publishers did the right thing.

What we don’t know, of course, is how the sales are breaking down by price point. I can relate anecdotal evidence that the agency pricing scheme is a failure on several levels, but no data has been released that enables a careful analysis.

I’ve mentioned it before, yet it is still true: Whereas before agency pricing I bought a lot of hardcover books and ebooks from the Big 6 publishers, my purchases have declined since the institution of agency. Whereas I used to visit my local Barnes & Noble at least once a week and buy a few books each time, it has been nearly five months since I last visited the store and bought an Agency 6-published book.

If the Agency 6 intended by their action to make me accept spending more than $9.99 for an ebook, they have failed — and failed miserably – because I am pretty unwilling to accept even $9.99, let alone a higher price point, as the sweet price point. Instead, I’ve gotten used to the indie author price points of $5 and less, with less being the dominant word.

I still occasionally “buy” an Agency 6 book, when they offer it for less than $5 or offer a bundle, such as three ebooks for $9.99, but more often when they offer an ebook for free. Agency pricing has backfired not only with me but with nearly all of my acquaintances who buy ebooks. The principal hurdle for the Agency 6 to overcome is the lack of physicality of the ebook.

Even though I and my friends have transitioned to ebooks and much prefer reading on our electronic devices to reading the pbook version, we have not made the price transition, and it is that transition that the publishers need (want?) us to make. Yet it is the publishers who have made the problem worse.

Publishers do not accept the idea that a book is a book is a book, regardless of whether it is electronic or print. In contrast, consumers like me have always thought that a book is a book is a book, regardless of form. We understand the difference between a hardcover and a paperback because we can both see and feel those differences; consequently, over decades we have become accustomed to paying more for a hardcover than for a paperback, perceiving — rightly or wrongly — greater value in a hardcover than in a paperback. (In fact, it was this perceived disparity that brought about the rise of the trade paperback. The trade paperback is perceived by consumers as offering less physical quality than a hardcover but more than a mass market paperback, and thus worth a price between the two.) But we continue to have difficulty wrapping our heads around the idea that, even though it lacks physicality, the ebook is worth more than the paperback and the hardcover (ever note how many times the ebook price is higher than the hardcover price or so close to it that there is little price differential?) at worst, and worth more than the paperback and only slightly less than the hardcover at best, or that it is worth the same as the trade paperback.

Because we have difficulty wrapping our heads around the agency pricing continuum, we have spent more time and money buying indie books, which seem to be priced more logically. Thus, I suspect that our experience is the experience of many ebookers; that is, we buy more indie ebooks than agency ebooks (with some exception).

The Agency 6, however, can point to the rise in revenues, and sometimes even in net income, they are experiencing, which is occurring even in the face of declining volume numbers and is attributable to increased ebook sales at the higher agency price. It is mixing, I think, apples and oranges in the sense that I suspect the biggest growth in volume and dollars is occurring in the indie/non-Agency 6 ebook market, not in the Agency 6 market. So the question not being asked or answered is this: What would the Agency 6 ebook sales volume and profits be if they had let the market do the pricing? Would their growth be significantly higher than what is being reported and would their net income be more marginal?

Also not asked and answered is what effect the commoditization has on consumer buying habits. Ultimately, will this cause even hardcover sales to decline significantly? This takes us back to the questions raised earlier in Clashing Perspectives: Coming Home to Roost and leaves us in the same place.

I used to “revere” books that I purchased. After all, I paid a lot of money for a hardcover and I treated it reverently. Take one off my library shelf and it appears in virtually the same condition as when I bought it. I wouldn’t let my children borrow one of the books until they learned how to handle them gently and carefully. None of this matters with my ebooks. Even if an ebook is accidentally deleted and the bits and bytes written over, I can replace it for free from my backup and have it in the same condition as when I bought it. There is no need to be reverent. Thus, the ebook is viewed as a commodity — a book is a book is a book.

reposted with permission from An American Editor

14 Comments on A Book Is a Book — Or Is It?

  1. Currently eBooks are not books because you don’t actually own them – you own a license to read them, under certain conditions. You can’t on sell to a third party, lend to more than a specified number of people, or make copies even if doing so is covered by fair use copyright law. In these circumstances it is utterly absurd for publishers to expect customers to be willing to cough up anything close to the price of a hardback or indeed even a paperback.

  2. Here in Spain we have a pitch-black close-up: http://www.cantonpequeno.com/2011/06/precios-de-los-e-books-en-la-fnac/

    Subject: Politics. Average price: 25,73 €
    Subject: Business. Average price: 24,2 €

    But the horizon seems brilliant, as they are saying Amazon and its more reasonable prices will land on 15 September…

  3. Rich, I have to agree with you. I haven’t bought an Agency 6 book since all this was announced. What I have don’t is found a lot of new indie authors/publishers that I might not have read. So in this regard, Thank you Agency 6 for showing me you aren’t the only show in town.

    I’ve been pleasantly surprised by the books I’ve found. Just the other day I bought 110,000 word book, which was 50 for the first book and you got the bonus of the sequel thrown in for free. I paid 3.99 for it and I was completely hooked on the story. I recommend people give the none agency publishers a chance. You can find some real gems if you look.

    Once I got over it can’t be a good book if its 1.99.. I have been opened up to a whole new world and whats more, I can afford to supply my book habit.

    So again,

    Thank you Agency 6..

    Oh, and I still buy a great deal of my books from Amazon.

  4. curiosity killed the... // 7 September, 2011 at 11:49 am // Reply

    they artificially are keeping the prices of ebooks high because most people dont realize the volume of drm that comes with an ebook version.
    i think that all books sold should come with bare minimum of a cd backup.
    that way if you order a book online ebook,paperback,hardback you can immediately start reading it in digital form while you wait for it to ship in the mail. if you ordered a paperback or hardback then it comes with a cd backup of the digital copy. and if you bought strictly a digital copy it should still come up with a cd backup in the mail.
    ebooks in its current state is simply free money to the publishers. once they create an epub or pdf,kindle form they can sell a billion copies of that file for no cost to them but the electricity of the server holding them all. is it that ridiculous to throw willing buyers of ebooks a bone and send a cd with a pretty case for a buck out of their pocket to produce?
    if you want us to pay the SAME price as a paperback there should be a reason for us to want to buy a digital copy with so much drm crap on it we cant even trade it to other people when we’re good and done with it.
    the cd on the other hand could be drenched in drm but as long as its physically in our hands we could legally sell and trade them like we have been for centuries.
    its a win win for publishers and buyers, publishers spend a fraction of the cost to produce each book sold as ebooks they increase sales of ebooks and reduce overhead costs of total physical books they have to keep in storage.

    • They are never going to send out a free CD as a policy. You would have to pay to get the CD copy because they CDs would beepensive plus you want them to ship it to you. Who wants a bunch of CDs with just one book on it anyways? If people aren’t buying music CDs then they surely are not going to buy book CDs.

      As far as DRM goes, people need to face the fact that it is not going away anytime soon. Publishers are going to try and protect their books as long as possible. Even if one google search and five minutes worth of work you can remove the DRM from any book with ease.

  5. One change that has followed the Price Fix scheme is that the ebook market has become more price sensitive over the last year.

    Whether the BPHs have achieved their true goal of protecting their bottom line or not is irrelevant in the face of what they *did* achieve, and that is raise awareness of price point as part of a book’s value proposition. Even readers that aren’t, like me, boycotting all content from the Price-Fix Six (18 months and counting) are aware that they are *choosing* to pay (or not) the higher price and that alternatives exist. Before, books came with a price, just as they came with a cover, and you either liked it enough to buy or not. Now, whether a book is priced at $0.99, $2.99, $9.99, or $12.99 carries meaning beyond the buy/no-buy decision.
    Instead of the monolithic pricing regime the BHs aspire to, we have a lively market-driven regime that (properly) ranges from $0.99 to $12.99 and beyond. As Amazon is fond of pointing out, the majority of ebooks (70-plus percent, if I recall correctly) sell for under $9.99.
    And Amazon may not be monopolizing the industry (they were never going to, anyway; nobody can) but they are stronger than before and the Price Fix scheme actually provided them with cover for moves that would have been widely criticized but are now seen by all but the most rabid Amazon-haters as perfectly reasonable reactions to the Apple-BPH axis.
    Also, self-published and indie published books have achieved full legitimacy and it can be a point of pride to find a (reasonably-priced) quality read from a non-traditional source, not unlike finding a nice little bistro that just opened up.

    ebooks may or not be fully commoditized now, but they are definitely headed that way and the actions of the Price Fix Six have definitely given it a strong push.

  6. Bah! As far as I’m concerned ebooks should cost nothing and I for one have no intention of ever willingly paying for one. The idea of copyright belongs in the same dustbin as divine right of kings.

  7. Great article, I wholeheartedly agree.

    My experience follows yours almost exactly, I have become an indie book addict! I have more ebooks than I could possibly read in my lifetime but still purchase more.

    As you do, I still get agency books but only if they are free or a special deal. I don’t think I’ve paid more than $6 for ANY ebook and only a couple at that price.

    I think that the agency increase in ebook profits may be because of the increase in the number of ereader purchases. New ereader owners probably gravitate toward their old favorite authors, usually agency, and then start to educate themselves on the market or discovering indies in other ways. Once the ereader market is saturated, I bet agency ebook profits stabilize or go down.

  8. I somewhat agree- but I think people are still missing the point of the agency model.

    It wasn’t meant to keep “the market” from pricing ebooks. Books are priced by the market no matter what model you use. The agency model was meant to keep AMAZON from pricing all the ebooks.

    Without the agency model, we wouldn’t have the nook and ibooks and google books and kobo and sony. We’d just have Amazon. And Kindle’s would still cost $300-$400 a pop, because the razor-and-blade model doesn’t make sense when you are selling the blades for a loss.

    So, yeah, I think it has helped grow the market for ebooks a lot.

    • Beg to differ.
      But six companies agreeing to price their ebooks at the same price, 30% higher than the previous high, and *forbidding discounting* has nothing to do with market forces or encouraging ebook adoption.
      Nor would I be too quick to claim iBooks as a gain for market forces, given how it is incapable of competing on a level playing field and needs Apple to mandate feature downgrades for competitors just so it can catch a few unwary buyers.

  9. I rarely pay more than $9.99 for a book. It has to be one hell of a book that I really want. I have bought plenty of books on the cheap and like you, have discovered more independent authors or great companies like Angry Robot that actual want to keep their prices low.

  10. In fact it is “The Market” which is driving prices currently. Yes, there is some collusion going on in broad daylight but, other than bloggers, consumers don’t care. I am certain you could put 10 books on a table and ask a customer in a bookstore which is “Agency 6” and which is not and they’d blink at you with total incomprehension. You could do the same thing with ecustomers.

    Publishers, including the Agency 6 publishers, continue to fine tune their pricing and promotion of ebooks and how to treat backlist vs new releases. And they continue to focus on acquiring the best content and ensuring it reaches the widest audiences.

    The sky didn’t fall; indie publishers didn’t take over; Agency 6 folks didn’t go broke; readers didn’t stop buying or reading; piracy didn’t explode. It’s been 18 months of further enjoyment of the world’s favourite authors consumed with great pleasure by the world’s readers. The only thing that has changed is the shift from paper to electronic delivery and that will continue for the foreseeable future. All the rest is just noise.

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